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Everything Everywhere, which has a combined customer base of 27 million, will roll out superfast 4G technology, which will allow users to download music and film to their phones at the same speeds as home or office computers.

The company, formed in 2010 by the merger of T-Mobile and Orange, has successfully trialled the new technology in and around St Newlyn East in Cornwall and will bid for coverage in auctions later this year.

Everything Everywhere recorded a 2% increase in underlying earnings to £1.4 billion as customers continued to switch to higher-revenue contract deals and demand for smartphones, such as Apple's iPhone and Research in Motion's BlackBerry, flourished.

Everything Everywhere said its customer base increased by 72,000 in the final quarter of last year, with 48% of all customers now on contracts.

In the final quarter, non-voice revenue, that is data and messaging, was up at 43% of average revenue per user as more customers took up smartphones.

Chief executive Olaf Swantee said the business was "capitalising" on opportunities provided by smartphones.

The company has been driving down costs to improve its margins, with £278 million in savings made last year, including an 8% reduction in staff, focusing mainly on senior management and head office roles.

Earlier this year, regulator Ofcom said at least 98% of the UK population would have access to 4G mobile broadband and will trigger a near six-fold increase in demand for smartphones and data.

The new licences, which will be auctioned by Ofcom, will give operators access to frequencies freed up as the UK switches off analogue TV and moves to digital.